TEPCO's intentions

August 13, 2014

TEPCO mulls spinning off hydropower, renewable energy operations

http://mainichi.jp/english/english/newsselect/news/20140813p2a00m0na008000c.html

Tokyo Electric Power Co. (TEPCO) is considering spinning off its hydropower and renewable energy operations as part of its plan to adopt a holding company structure in April 2016, it has been learned.

The utility had planned to spin off its three business operations -- thermal power generation, power transmission and distribution, and retailing -- and make them independent companies. But it will spin off a total of four business operations after turning its hydropower and renewable energy operations, which are part of its power transmission and distribution operations, into a separate company. TEPCO, the operator of the crippled Fukushima No. 1 Nuclear Power Plant, is looking to secure neutrality for its power transmission and distribution unit and improve the efficiency and profitability of the other three operations as stand-alone business entities.

In its "New Comprehensive Special Business Plan" worked out in January this year, TEPCO adopted a policy of spinning off three business operations -- thermal power generation, power transmission and distribution, and retailing -- under a holding company, starting in fiscal 2016. The hydropower and renewable energy units were included in the new power transmission and distribution company to be established. As for the electricity system reform pursued by the government, major utility companies will be required to separate their power transmission and distribution operations from their power generation and retailing services by around fiscal 2018 to 2020.

Under these circumstances, TEPCO is considering separating its hydropower and renewable energy operations from its power transmission and distribution functions. Apparently, the plan is also aimed at making it easy for the envisaged new companies to secure funds from private financial institutions as business entities that are independent of the holding company that holds responsibility to pay damages linked to the Fukushima nuclear disaster and decommission the crippled nuclear power complex.